Osborne pays price of wage squeeze

BRITAIN’S long-running wage squeeze was blamed yesterday for a shock rise in Government borrowing.

The news of greater government borrowing will be grim news for Osborne [GETTY]

Last month’s £11.8billion figure was £1.6billion more than in September last year – and £1.3billion higher than economists expected.

Total borrowing since April stands at £58billion – that is £5.4 billion or almost 10 per cent above the last financial year’s halfway point, the Office for National Statistics stated.

Much weaker-than-expected earnings growth has limited income tax receipts, along with a large number of people being in low-paid jobs or self-employed

Howard Archer

Experts blamed sluggish and non-existent wage rises for weak returns from taxes on income and wealth despite there being record numbers of people in work and an economic recovery well underway.

Government spending was nearly four per cent higher than a year ago, with higher pensions contributing to a 5.4 per cent rise in social security payments, while higher tax-free thresholds hit income tax receipts.

But a buoyant property market continues to funnel soaring stamp duty into Government coffers.

The ONS report cast new doubt on Chancellor George Osborne’s hopes of meeting official forecasts of cutting the whole year deficit by 12 per cent to £95.5billion in 2014-15.

Howard Archer, of IHS Global Insight, said: “Much weaker-than-expected earnings growth has limited income tax receipts, along with a large number of people being in low-paid jobs or self-employed.”